Bill to impose an excise tax on e-cigarettes clears House committee

In an effort to address the youth vaping crisis and generate new revenue for the state, the House Appropriations and Revenue Committee passed House Bill 32 Tuesday, which would place a 25 percent excise tax on e-cigarettes. E-cigarettes are currently the only tobacco product available in Kentucky that does not carry an excise tax.

The bill would also increase the excise tax on smokeless tobacco products from 15 to 25 percent.

Rep. Jerry Miller of Louisville, the bill sponsor, presented his bill Tuesday with Ben Chandler, executive director of the Foundation for a Healthy Kentucky.

“The main purpose of the bill is to reduce youth vaping,” Miller said. “Young people are more sensitive to increased prices, so this bill will aim to directly defer our youth from purchasing these harmful products.”

Miller also said the bill would raise approximately $22 million for the state in Fiscal Year (FY) ‘21 and around $27 million in FY ‘22.

Chandler said he heard concerns that raising the tax on e-cigarettes would be relying on a declining revenue stream.

“Unlike cigarettes, e-cigarettes are not a declining revenue stream,” Chandler said. “Youth tobacco use rates are escalating rapidly for the first time in decades, and it’s because of vaping.”

Chandler said the youth vaping epidemic goes beyond high school students.

“We have research that shows 17 percent of middle schoolers vaped in 2019,” Chandler said. “That’s a significant increase, up nearly four times the rate of middle school usage from 2018.”

The Kentucky General Assembly voted to increase the excise tax on traditional cigarettes by 50 cents in 2018, which Chandler said led to approximately 36 million fewer packs of cigarettes being sold the following year.

Opponents say the new tax will negatively impact dozens of small business owners that run specialty vape shops that aim to give adults a healthier alternative to traditional cigarettes.

The bill now moves on to the full House of Representatives.